ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Thursday, February 6, 1997 TAG: 9702060044
SECTION: NATIONAL/INTERNATIONAL PAGE: A-1 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Knight-Ridder/Tribune
It seemed so simple. A popular president fresh from re-election, hoping to make his mark in a second term with a proposal to change the tax code.
The president was Ronald Reagan, and his 1985 proposal was to simplify the tax code, strip away dozens of tax deductions for special interests and lower overall tax rates for everybody. Americans would understand their tax system and trust that they were getting the same treatment as fat cats in Washington.
Now comes another president eager to use the tax code to make his mark on a second term. But President Clinton is going in the other direction. He wants more tax breaks, not fewer, urging them for college tuition, businesses that hire people off welfare, families with children under age 13, and other things.
And he is not alone. Congressional Republicans and Democrats have their own tax-break proposals for farmers, and homeowners, and investors.
Added to the thousands of other changes in the decade since the Reagan plan was enacted, they underscore the defeat of tax simplification. In fact, they represent the latest installments of a trend of making the federal tax system more complex. It is a trend that feeds lobbyists, breeds accountants and fuels mistrust of the government.
Don't look for any reversal of the trend.
In the new, more conservative politics that reigns in the federal government, few dare propose new federal programs or federal spending, no matter how much they want to solve problems or please constituents. Instead, they propose targeted tax breaks.
Taken individually, almost any tax break makes sense. Propose a tax break to help people pay college tuition, and few would argue. A tax break for struggling families? Of course. For people selling a home? Naturally.
But when people start filling out their tax forms, and see all the tax deductions they aren't entitled to get, and when they start hearing about all the other breaks other people get, they start feeling like someone else with more money and more clout is getting away with something.
``People just become skeptical every April when they do their taxes,'' said Andrew Kohut, a pollster with the Pew Research Center for the People and the Press.
When they think about the complexity of the tax system, about the time and money it takes for the entire country to figure out taxes, he said, ``it feeds a feeling that nothing ever changes.''
In a poll taken just before last November's election for U.S. News and World Report, 57 percent of registered voters said they thought lobbyists and special interests control the federal government, compared with 11 percent who thought congressional Republicans control the government, 9 percent who thought the president does, and 5 percent who thought congressional Democrats do.
A generation ago, the tax code was simpler, tax forms shorter. As he campaigned for a simpler tax system in 1985, Reagan noted that, ``When the income tax first became law back in 1913, the tax code amounted to just about 15 pages.''
Congress enacted his proposal to simplify the system in 1986. It didn't last long.
Within five years, Congress enacted more than 5,000 changes to the tax code, according to House Majority Leader Dick Armey, R-Texas, a vocal proponent of a simpler tax system. And they continue to add up, though there have been so many changes that no one - not congressional tax analysts, not the Internal Revenue Service, not even H&R Block - can say how many changes have been made to the tax code in recent years.
As the tax code has continued growing in the last decade, so has the lobbying industry in Washington, employing more than 67,000 people. The $8.4 billion-a-year industry is larger than the economies of 57 countries.
And more lobbyists work on getting changes in the tax code or protecting existing tax breaks than on any other issue in the federal government, according to a study done by Armey's staff.
``The worst fears of the American people are true: The tax code is the largest playground for Washington's vast and growing lobbying industry,'' said Armey.
In his book, ``Behind the Oval Office,'' former White House political strategist Dick Morris explained how he pushed Clinton to propose tax breaks for college tuition, even though increasing federal scholarships might be more helpful for people attending college.
``In the old days of big government, he would have done it through a national scholarship program, with grants and a bureaucracy. Now, in the age of smaller government, it makes sense to cut taxes so as to accomplish the same goal, sending people to college,'' Morris wrote.
When Treasury Secretary Robert Rubin argued that tax cuts would be inefficient, that scholarships would be more effective, Morris said he countered that ``politically, we need a tax cut to beat the tax cut we expect [GOP candidate Bob] Dole to propose.''
Offering a tax break for college has the same effect on the budget as spending - they both cost the Treasury money - but a far different political effect. Republicans who would scream about new spending are hard-pressed to oppose a tax cut, even if it is targeted.
Congress plays, too.
``Members of Congress don't run on nothing,'' said former Minnesota Rep. Bill Frenzel, who served on the tax-writing Ways and Means Committee and now studies federal tax and budget policies from the Brookings Institution.
``They could enact a perfectly simple tax system. But they'll all go home, walk around their district and find something that would be helped by a tax deduction. In three years it would be cluttered up again.''
LENGTH: Long : 103 linesby CNB